Lack of access to quality public health services and a rapidly growing unregulated private sector have led to a situation where an increasing number of people are getting trapped in debts or slipping into deeper poverty due to the expenses of hospitals. At the national level, at least 25 % of hospitalised people are falling below the poverty line only as a result of hospital-related expenses. The situation is even worse in states like Bihar, Uttar pradesh and Punjab ( Northern India).
Health is an important contributor to productivity and economic growth and the government is planning to revamp health systems so as to have pro-poor policies in place. A close look at the states shows that prosperous states or those that compare with developed countries on their social indicators cannot withstand the strain of hospital expenses.
The Indian Health Report has pointed out that as the private sector is unregulated, its cost, quality and distributions are not guided by national health goals. The poor are then forced into a situation where they have to pay for private health care they cannot afford. Their deprivation and vulnerability makes them ill more easily and illness makes them poorer. Coupled with the fact that only 10 % of Indians have some form of health insurance, health care costs are prohibitive for most people. A recent analysis of the World Bank concluded that the hospitalised Indian spends more than half of his total annual expenditures on buying health care. And more than 40 % of the hospitalised people borrow money or sell assets to cover the expenses. The study also suggested that out-of-pocket medical costs alone may push 2.2 % of the population below the poverty line in one year.
While the government has increased health budgets, the current reality is that India has one of the lowest health budgets in the world.